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Market makers: Stakeholders call for enabling environment, strict monitoring

By NKIRUKA NNOROM

Stakeholders in the Nigerian capital market have advised that for the recently appointed market makers to achieve the objective of returning liquidity to the market need enabling environment as well as strict monitoring on their operations.

Some of the stakeholders that spoke to Vanguard insisted that monitoring of their activities was necessary to avoid any form of share price manipulation that might arise in the course of their duty. They, however, agreed that the introduction was important to boost liquidity and stem price volatility.

Ambassador Timothy Olufemi, who described the appointment as good idea, said it was needed to solve the long standing problem in the market.

He maintained that there must be strict supervision and regulation of their activities to ensure that they play by the rule.“To ensure that we don’t go back to our past experience where share prices were manipulated, the regulators must be alive to their responsibilities. They must ensure that there are stipulated rules guiding their operations and they ensure that they operate within the confine of the rules,” he enthused.

“There are some companies that have over issued shares. They should pick on those companies and support them. The Nigerian Breweries and First Bank of this world has too much shares on issue. We need somebody to mop them up so that they can attain their real value,” he added.

Agreeing with him, Mr. Idowu Ogedengbe, another shareholder, argued that their success would depend on the expected restoration of investor confidence and increase in mandates from institutional investors, pension fund managers, offshore endowment fund and portfolio managers.

“Equally critical for the success of market making is the ease and cost at which market makers will be able to borrow shares in order to meet client purchase mandates when they don’t have the shares in their inventory.

“It is also important that the infrastructures, structures and processes necessary for the effective running and monitoring of the new regime are first put in place. The risk management protocol and crisis recovery mechanism among the operators should be well monitored and supervised by the regulators to prevent another crash in the market due to undue exposures by the operators,” he posited.


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